Petrol to hit £1 a litre after US buys up supplies

Ashley Seager
Friday September 2, 2005
The Guardian


Motorists were warned last night that petrol prices seem certain to pass £1 a litre within days after Hurricane Katrina wiped out many of the oil refineries on the US Gulf coast.

As US oil companies bought up 20 shiploads of European petrol yesterday, the wholesale price of petrol on the Rotterdam spot market soared to a record of $855 a tonne (more than $100 a barrel), up more than 20% in two days and something experts said would feed through to the forecourt within days.

The Petrol Retailers' Association calculated that the spot price rise could add almost 10p a litre to pump prices if it were passed on in full to consumers, something the oil companies may be reluctant to do.
Prices yesterday were around 92p a litre for unleaded and 96p for diesel. Wholesale diesel prices in Rotterdam also set record highs yesterday, so the £1 a litre diesel price could be seen by the weekend and by Monday at the latest, a PRA spokesman, Ray Holloway, said.

He said Esso had put up its prices to retailers by 8p a litre yesterday, which would take unleaded to £1 a litre when that fuel hits the forecourt in a matter of days, especially once VAT is added.

Esso would not confirm the 8p rise but said it had raised prices by 2.5p a litre on Wednesday.

A spokeswoman for Shell said it was determined not to pass on the full 8p that the increase of the previous two days would imply. She said the UK petrol market was so competitive that Shell lost money on every litre of fuel it sold.

BP would say only that the price of products had risen and it was monitoring the situation.

Petrol prices in Britain are among the highest in Europe because of the duty and VAT charged on them but are still cheaper than Denmark, Norway and the Netherlands.

Pump prices in the US, where fuel taxes are much lower, have risen to over $3 a gallon (42p a litre) in many states.

A White House economic adviser, Ben Bernanke, said yesterday they would rise further but then fall back as the situation in Louisiana became more stable.

Hurricane Katrina forced the closure of about nine refineries in Louisiana, Alabama and Mississippi, which together refine about 10% of America's gasoline. However, demand is slowing as the US holiday season ends.

Oil prices, by contrast, fell back slightly yesterday from record highs earlier in the week. US crude futures fell below $69 after setting a record just below $71.

Traders said oil supplies were not the big problem, especially as the US government on Wednesday promised to release some of the country's 700m barrel strategic petroleum reserve, some of which is stored in old salt mines in Louisiana. That was because of a disruption to crude production offshore in the Gulf of Mexico, where rigs were torn adrift by the storm. Some have since washed up onshore.

But the strategic reserve contains only oil, not gasoline or diesel, hence the scramble to buy from Europe.

The Treasury responded to the rising fuel price by stressing it had announced in July that a duty increase planned for yesterday would be scrapped because of high oil prices. Fuel duty, now 47.1p a litre, has not risen for two years.

<<the wholesale price of petrol on the Rotterdam spot market soared to a record of $855 a tonne (more than $100 a barrel), up more than 20% in two days and something experts said would feed through to the forecourt within days.
>>

Whiever bet on that horse may have bet on the wrong horse.
http://www.msnbc.msn.com/id/5612507/
<<The post-Hurricane Katrina petroleum-supply outlook improved somewhat on Friday as U.S. and European governments agreed to release 2 million barrels a day of oil and refined products from their reserves.

The announcement by the International Energy Agency was made after energy markets had closed, but prices fell on reports that it was coming. Light sweet crude for October delivery fell $1.90 to settle at $67.57 a barrel on the New York Mercantile Exchange. Gasoline futures tumbled nearly 23 cents to settle at $2.18 a gallon, their first decline this week.

>>

Rotterdam is pricing gasoline in tonnes and New York in gallons (3.8 L). So how does one compare the prices without first running for a reference to find the density of gasoline, then doing a conversion?

Who else uses the tonne as a basis for fossil fuels instead of the barrel?

Actually, New York, and many places use the barrel, exactly 42 US gallons, but so close to 159 L as to not matter. But to compare mass and weight, you need density or specific gravity. It varies for different grades of oil.

For general comparison, a value of 7.33 barrels/tonne is often use, approximately a specific gravity of about 0.86. For detailed comparison, you have to know the density, and lighter oils are generally preferred for refining and higher priced.

But you don't want to buy it for $100+ a barrel in Europe and bring it to New York to sell for $67. That's called buying high, and selling low.

I misread petrol as petroleum, I guess, as we were talking different things.
However, the price per gallon for gasoline quoted in my article is $91.56 per barrel, so you wouldn't want to pay over $100. Gasoline or petrol is much lighter than crude oil, so my figure of 7.33 barrels per tonne average for crude is NOT applicable to refined product.

For refined gasoline, I found
density = 0.73 t/m^3 or 8.53 barrels per tonne. However, density changes from summer to winter as they change the formulation. At best the figure is an average.
http://bioenergy.ornl.gov/papers/misc/energy_conv.html

Oops, that was me.

"But you don't want to buy it for $100+ a barrel in Europe and bring it to New York to sell for $67. That's called buying high, and selling low.

However, the price per gallon for gasoline quoted in my article is $91.56 per barrel, so you wouldn't want to pay over $100."




You may not have a choice if you are in short supply and you may wish to avoid a mass panic and street rioting in major US cities due to a fuel shortage or extremely high prices. Some areas are out of Diesel fuel completely and in our area, truckers (lorry drivers) are being rationed. Some American laws require the use of Boutique-fuels to be used in some cities. Gasoline promised by Europe to arrive in about a month is not of this type and there is concern that these communities may go dry if permission is not given to allow these non-boutique fuels in.

The American economy can not survive on either fuel shortages nor international gasoline prices. One dollar plus per litre pricing in the US would permanently damage the US economy. But it is coming to that because of the immense loss to the fuel collecting, refining and distribution along the Gulf Coast.

Or, this may be overblown, and combined with a big holiday, some price gouging going on. I know I'm holding off on a fill-up until early next week, as I think the price will drop a bit by Tuesday or Wednesday. We'll see who's right.

There are two major pipelines that feed the east coastal cities from Louisiana. They are only operating at partial capacity. Most of the refineries and storage facilities are heavily damaged. Even if you could get raw oil from any source, you still need to refine it and all refineries before the storm were at 100 % capacity. Americans before the storm were using a record amount of fuel. With a 10% loss from Louisiana, I'm at a loss to see how there can't be spot shortages if people aren't cutting back.

http://www.registerguard.com/news/2005/09/02/ed.edit.katrinaenergy.phn.0902.p1.php?section=opinion

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20050901005781&newsLang=en

http://www.smh.com.au/news/business/damage-to-gulf-oil-rigs-mounts/2005/09/02/1125302739885.html

http://www.financialexpress.com/fe_full_story.php?content_id=101211

To keep the wastage of fuel to a minimum, there will have to be high prices, it is unavoidable. Or, there will have to be rationing.

I wonder if petrol will get to the next "landmark" of £5/gal.

Personally I think it'll drop back first.

<<<I wonder if petrol will get to the next "landmark" of £5/gal.>>>

Most of the population would not know that it hasn't already passed that "landmark"

So aside from sensationalised headlines that really means that it is not a landmark.

We'll see!

(actually, lets hope we don't!)

depends what you mean by a landmark.

You can use anything you like as a landmark. The £4/gallon wasn't a landmark to most of us, because it was just a figure used to sensationalise it.

£1/litre is a real-life landmark because people will actually SEE it.

In fact the petrol stations may need new signs because I'm not sure they cater for an extra digit

Well, prices have abated a little here. (note: prices vary widely across the US, so "your mileage may vary")

Before Katrina, prevailing price around here was $2.699, some more, some less, but pretty much the "most common." At the end of the week, it got up to $3.299. Yesterday, it was down to $3.159 at one station I use for a benchmark, and today $3.059 at another. If I use the usual blind extrapolation the press uses, in 25 days they will be paying me to take the evil fluid away for them.

I think reality is that it will settle between $2.80-2.90 until supply improves.

For your information, the price of 1 pound per litre is equal to 1.47 euros per litre and 1.84 dollars per litre. The average American price is about 1 dollar per litre less. The price in Germany is 10 cents less then the UK. http://www.benzinpreis.de/statistik.phtml

By sticking with litres it makes it easier to compare fuel costs internationally.

But those price differences are basically gas (or petrol) taxes they have let their politicians impose, so why bother to compare. It's not like I can (or would) drive to the UK or Germany to buy fuel. Even Canada has higher fuel taxes than the US, and I would avoid buying more fuel there than I needed to return to the US on my planned route.

I prefer metric too, but once I'm in the US, where it is cheaper, the prices are all per gallon. While arguing for metrication, it is easier to use the data readily available, until we get it changed.

If any US politician is looking to be unemployed, all he needs to do is suggest European-level fuel taxes here.

For those who can't convert, my observation above translates to $0.808/L. More important is being DOWN 7.3% in 2 days.

Dammit! Another reason why Germany is better than us.

Oh I wish I was German.

X-D

I guess the "Fuel Apocalypse" has been deferred until sometime in the future. Gas was down to $2.959/US gal today ($0.7814/L)around my area. Not quite in the range I predicted above, but its getting there. Some refineries in Louisiana weren't as damaged as initially thought and are reopening.

I'm more worried about the availability of heating gas for the winter. People are too overly concerned about gasoline. This is the time of year they stockpile heating gas for winter. There really are no refineries for that. It comes out of the earth and into storage. With the off-shore rigs heavily damaged or completely destroyed, the amount of gas will be limited, possibly rationed and awfully expensive. I heard that a third of our gas comes from the region destroyed by Katrina.

Garage boss defends £1-a-litre petrol hike

A PETROL station manager today defended price hikes that have sparked fears of new fuel protests.

Customers at the Total garage on Normoss Road, Blackpool are being charged £1.02 for a litre of unleaded petrol.

But station manager Jason Hopwood today said the increases were unavoidable if he wanted to stay in business.

And he vowed to lower the prices again as soon as possible.

He said: "I didn't want to go over the £1 barrier but I had to.

"I am a dealer who sells Total petrol, I am not owned by Total.

I buy the fuel from them and the cost of buying it has gone up recently.

"In fact, I am paying more for the fuel than some other garages are selling it for.

"I have a small margin I have to maintain because I have wages to pay. Major oil companies can afford to absorb the increases, but that is not possible here. When the cost of a barrel of oil goes down again I will be one of the first to put it down.

"Of the money motorists pay for fuel, the biggest portion goes straight to the Government in tax. Another big chunk goes to the oil companies and then finally to the retailers."

World oil prices, already high due to problems in the Middle East and high demand from China, hit a record $70.85 a barrel last week after Hurricane Katrina battered refineries off America's Gulf Coast.

Fears are rising that there will be a repeat of the chaos that followed fuel protests in 2000 when mass panic buying led to huge queues at the pumps.

Protest group, The Fuel Lobby, has now warned the Government that if it doesn't lower taxes it will blockade UK refineries again.

But budget airline, Ryanair, which flies out of Blackpool Airport, today said they would not be slapping a fuel charge on flights.

Peter Sherrard, Ryanair's Head of Communications said: "The only way passengers can be guaranteed to avoid fuel surcharges is by booking with Ryanair. Only Ryanair guarantees no fuel surcharge on its rock bottom fares – not now, not ever."

Taxi passengers in Blackpool will also not be stung with increased fares.

A spokeswoman for Blackpool Council, which sets the prices, said: "There are currently no plans to increase taxi tariffs."

rebecca.smith@blackpoolgazette.co.uk

09 September 2005
Page 1 of 1








Petrol over £1-a-litre
Published on 08/09/2005

PRICES just keep on rising for fuel and one Whitehaven driver has already had to pay over £1 a litre.

George Beckett, of Coach Road, Whitehaven, visited Silloth at the weekend and unable to travel much further, had to look for the only filling station there. He said the cost was a staggering £1.04p per litre. Mr Beckett said: “they are not even paying that in New Orleans, but we had no choice”

Prices have risen locally, with Corkickle filling Station, Whitehaven’s, unleaded petrol the dearest on Tuesday, at 98.8p a litre. Other filling stations such as Graham’s, Egremont, and Hill’s Garage (Pelican) in Whitehaven equal the unleaded prices at 96.9p per litre. Tesco was selling it at 95.9 pence.

Christine Graham, partner at Graham’s filling station, Egremont, said that although prices have risen, business has not suffered because people still have to buy fuel, due to the lack of public transport.

The first garages to break through the £1-per-litre barrier were both in north Cumbria: Tuddenham’s, Longtown, where unleaded petrol was 101.9p per litre, and Station Hill Garage, Wigton, (104p).

INCREASING fuel costs continue to concern all aspects of the economy. David Dobson, chief fishery officer for Cumbria, highlighted the dangers of rising fuel prices in connection with operating fishing vessels. The fishing industry is at risk of loosing money because the fishermen simply cannot absorb the extra cost of fuel.

Only a week after my Sep. 6 post, I saw gas for $2.699/gallon on my way to Farmer's Market this morning. That is a pretty good price. To be honest, the more common prices I saw were $2.759 and $2.799. All the prices I saw fit better with my model above than hysteric predictions of $4 and $5 gas.

Sorry, I know you guys pay more, but it is all taxes.

Sorry for this "reality interruption, please return to regularly scheduled "the sky is falling."

Just in case anyone cares, it is about $2.959 over here.

Sorry for this "reality interruption, please return to regularly scheduled "the sky is falling."

LOL!!!! :-) :-) :-)

The fuel apocalypse has been cancelled. Gasoline was $2.399/per gallon this morning. Considerably less than before Katrina. I suppose the next spike will be the "crushing Iranian petro euro bourse" in March. But I'll take a wait & see attitude.

Notice though that diesel fuel prices are still a dollar plus more then gasoline. Why? We don't have reserves of diesel fuel to flood the market with to lower the price like we can with gasoline. Thus the price of diesel stays high. So what happens when the reserves are exhausted and the production infrastructure still isn't repaired?

Keep in mind how the price of diesel and not the price of gasoline affects what you buy! Everything shipped is done with trucks running on the still expensive diesel.

I'm also waiting to see the effects of the natural gas price hikes to take place over winter. If you were finding it hard to pay a 300 $/Month gas bill last year, how much easier is it going to be to pay one that is 500 ~600 + dollars? Do you think the pampered freeze babies are going to lower the thermostat to save money or just add the bill onto their already un-payable debt? Don't be surprised if by mid winter the number of US bankruptcies soars skyward!

Also, think of the cost of heating factories and offices! Don't you think that the high cost of heating is going push some shaky companies over the edge?

Wow... it's that cheap in Michigan? It's 20 cents more over here. That didn't seem to be the case the last time we shared priecs.